The Federal Government is intensifying efforts to raise Nigeria’s tax-to-GDP ratio from under 10 percent to at least 18 per cent in the next three years, a move aimed at plugging revenue leakages and restoring public confidence in the system.

This was disclosed by the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, during an interview on Aise TV on Thursday. He said the new target will be achieved through recently signed tax reform laws by President Bola Tinubu, which are structured to correct inefficiencies and promote fairness in the system.

“Today, the Nigerian economy, it’s in the region of maybe 270 to 300 trillion naira. Not big enough. But when it comes to the tax yield, it’s even very embarrassing. Until last year, we were doing under 10%. South Africa is doing 26%. Some more developed countries are doing 30, 34, 40, like France.

“So the yield has been so small. And when we did our analysis, what we found was the tax gap. The difference between what we are collecting and what we could be collecting, is as high as 70%. Now, that gives you two major challenges.

“On one hand, it means you’re not collecting the revenue you should be collecting. On the other hand, it means you are rewarding the people who are evading taxes because some are paying. So we needed to fix that,” he said.

He explained that the newly signed laws include the Nigeria Tax Bill, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Bill.

According to Oyedele, these laws were crafted with deliberate measures to encourage compliance while discouraging evasion without raising tax rates on the majority of citizens.

“In the design of the tax bills, now tax laws, what we have put there are measures to make it more difficult, more costly for you to evade taxes and a lot easier for you to do the right thing.

“So with that, without raising taxes on people, we think that we can close that gap by more than half and therefore double Nigeria’s tax revenue. This is the reason why we’re so comfortable and confident that we can raise Nigeria’s tax to GDP ratio from under 10% to a minimum of 18% within three years,” he added.

One of the standout provisions of the new law is the exemption of Nigerians earning less than ₦1 million annually from paying personal income tax. Previously, individuals earning as low as ₦300,000 were taxed up to 7%.

He said, “One of its central provisions is that people who don’t earn up to a million naira a year will no longer pay income tax. Before now, people who earned as little as 300,000 naira a year used to pay up to 7% income tax.

“The other notable provision is that small businesses whose gross turnover is not up to 50 million naira a year will not pay company income tax. Corporate income tax is now set at 30% and value added tax or VAT is now 7.5%. There’ll be no VAT on essential items like food, education and health care. VAT is also exempted from things like rent and public transport.”

Oyedele further emphasized that the broader goal is to build citizens’ trust in government through accountability and transparency in the use of tax funds.

“People will say, ‘after collecting the revenue, so what?’ So our reforms also address the application of tax revenue and other revenues of government, including enhancing transparency and accountability. Almost like a reset of the social contract, so Nigeria can work for Nigerians,” he said.

He also acknowledged that these reforms were long overdue, and praised President Tinubu for having the political will to back the committee despite the criticisms and pressure.

“The need for the reform, and this should have been done like 30 years ago. That’s why I’ll give the credit to the president again and again. This is a real demonstration of political will, courage and character because this thing got so heated at some point and people were calling him all manner of names.

“Some of the things we demanded for, he didn’t even know we put them in those bills. He took all of that. There was not a moment that he blamed us for anything”, he added.